RAC coding targets

The Recovery Audit Contractor (RAC) program that concluded in March identified $371 million in improper payments during FY2007. Among inpatient hospitals, six service areas accounted for $117.2 in overpayments.

These areas, the amount of overpayments, and the total number of claims audited, include:

• Excisional debridement $36.2 million, 3,372 claims
• Inpatient rehabilitation facility (IRF) services following joint replacement surgery $20.8 million, 1,833 claims
• Heart failure and shock $19.3 million, 3,331 claims
• Surgical procedures in wrong setting $17.1 million, 1,610 claims
• Respiratory system diagnoses with ventilator support $15.3 million, 966 claims
• Extensive OR procedures unrelated to principal diagnosis $8.5 million, 686 claims

The above data was taken from the CMS RAC Status Document FY2007: Status Report on the Use of Recovery Audit Contractors (RACs) in the Medicare Program.

As a result, RACs are expected to increase their focus on claims in these service areas—making them "coding targets"—due to the volume of overpayments that they identified. RACs review the claims via two methods:

• Automated review – when the RAC is able to make an over/under payment determination without evaluating the medical record.
• Complex review – when the RAC makes an over/under payment determination after evaluating the medical record.

The Tennessee Hospital Association has created a RAC Resources page on its Web site that includes several presentations designed to help increase provider awareness of RAC targets, which include:

Coding Targets:

• Reporting of excisional debridement (86.22) w/o adequate medical record documentation to meet the definition of “excisional,” (MS-DRGs 573-578 and MS-DRGs 463, 464 and 465).
• DRGs designated as CC or MCC with only one secondary diagnosis.
• Correct coding of discharge status for post acute care transfer (discharge status codes)

Unit Coding Targets

• Grams vs. milligrams
• Number or procedures per day (e.g., appendectomy, colonoscopy) (automated review)
• Blood transfusion 36430, billed 1 service per pint rather than 1 service per transfusion session (automated review)
• Speech/hearing therapy 92507, billed 1 service per 15 minutes rather than 1 service per session. Processing manual 100-5, Chap 5, Sec 20.2 (automated review)
• Neulasta J2505, billed 1 service per mg when the definition of the code is 1 service per 6 mg vial. Transmittal 949. (automated review)

Medical Necessity Targets

• Inpatient admissions for procedures that are eligible for outpatient surgery (e.g. laparoscopy, cholecystectomy)
• One-day stays that would qualify as observation (e.g., chest pain: MSDRG 313, back pain: MSDRG 551)
• Three-day stays to qualify for SNF care
• Inpatient rehabilitation (joint replacement patients)—RAC determines service was medically unnecessary for inpatient setting according to Medicare ruling 85-2 and Medicare Benefit Polity Manual Section 110.

According to the January 2008 CMS Improper Medicare FFS Payments Report, the following are the most frequent medically unnecessary errors that were identified during the RAC program:

• 20.1% MSDRG 313 Chest Pain
• 15.5% MSDRG 551 Medical Back
• 11.9% MSDRG 391 Esoph,Gastroent
• 10.7% MSDRG 640 Nutr & Misc Metab Disor
• 9.8 % MSDRG 287 Circ Disor
• 9.6% MSDRG 264 Oth Circ Sys OR Proc
• 9.2% MSDRG 637 Diabetes
• 8.1% MSDRG 312 Syncope